The global economy is holding up
This past year was rife with risks to the global economy: policy changes, tariff uncertainty and more. Yet, the global economy held up as manufacturing and services activity strengthened across the world. We see an opportunity for U.S. investors to diversify geographically.
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Published on 18 November 2025
The global economy remained resilient this past year during a time of pronounced policy and tariff uncertainty, as well as geopolitical tensions. Yet, fiscal support, monetary easing and strong capital expenditures helped economies deliver positive growth.
A key measure of economic conditions, the Global Composite Purchasing Managers’ Index (PMI), a weighted average of the global manufacturing and services PMIs, provides a snapshot of overall worldwide economic health. A reading above 50 indicates economic expansion, while a reading below 50 suggests a contraction. This metric is at its highest since August 2024 and underpins our positive outlook for global growth as we head into 2026.
A strong global economy is important to investors because increased economic activity leads to higher corporate profits, boosting stock prices. It is one of the reasons we maintain a constructive view on equities and why diversification across regions remains important.
841998 Exp : 18 November 2026
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Higher interest rates have become a frequently cited risk to corporate earnings and the economy. The conventional thinking is straightforward: when borrowing costs rise, companies face higher interest expenses, profits come under pressure, and economic growth slows. While there is truth to that relationship, the current cycle may differ from investors’ expectations.
Both the dot-com era and the rise of artificial intelligence suggest that early productivity data can understate the actual economic impact of transformative technologies. In the case of the internet, later revisions to productivity gains surpassed early estimates. The same may prove true for AI, implying stronger support for growth.
History of stocks after the Fed hikes
History of stocks after the fed hikes
Sticky inflation and resilient growth have revived monetary tightening, increasing the risk of higher-for-longer rates and near-term volatility. We continue to believe economic resilience and strong corporate profits should continue to provide a favorable backdrop for stocks, and would use periods of market weakness to add selectively to equities. Additionally, owning real assets can help hedge against inflation.
